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Going up...

Published: Thursday 06 September 2018

  • Sterling slides then leaps up on Brexit news 
  • US Dollar remains resilient
  • Euro also benefits from Brexit boost
  • Chinese performance supports global economy
Sterling slides then leaps up on Brexit news 
Sterling has been under pressure from more Brexit discussion disappointments, but then received an unexpected boost from stronger than anticipated Service Sector Purchasing Managers' Index (PMI) results and talk of Germany conceding to some of the UK’s Brexit demands, working instead for a more harmonious transition. These were non-attributable rumours and after they were not confirmed, the Pound sank back down a little, but Sterling is still hanging on, awaiting the next Brexit bulletin. Politics will continue to drive the performance of the Pound; we are seeing that in concerns about global trade and every nuance of the interminable Brexit rhetoric. The constant yo-yoing of Sterling strength as the latest Brexit updates reach the markets is inescapable - so there will be more volatility ahead; no doubt about it.
UK economic data has been mixed, with overall business and consumer confidence still shining through despite some data disappointments. The Pound has enjoyed some strength against its key currency partners, the Euro and US Dollar; whether this will extend further or fall on another Brexit blow is the billion-dollar question...
US Dollar remains resilient
Meanwhile, despite the chaos of international trade talks, the US Dollar has mostly ruled the roost this week. The US economy and the US currency remain relatively strong, despite twittering from Trump over trade wars and regular rhetoric that should, in theory, weaken the US Dollar. But political and economic uncertainty worldwide is one of the key drivers of US Dollar strength, as investors turn to what they consider a safer and more stable economy. To buy US Government bonds, investors have to first buy US Dollars.
The latest, more positive Brexit developments have offered a lift to both the Pound and the Euro against the US Dollar, but these exchange rates are still below important psychological levels. Markets are currently awaiting a swathe of US economic data, which may also play a part in the fortunes of the US Dollar and its currency counterparts.
Euro also benefits from Brexit boost
The most recent Brexit news has also served to strengthen the Euro, as it too, pushes up against the US Dollar. Uncertainty about appropriate deals for the EU have also added to the burden on the Euro, given political and economic troubles in Italy, Turkey and Greece. A glimmer of hope from Germany proved a happy helper for the Euro as well as the Pound. France has also confirmed support for and a commitment to reaching a UK-EU deal, so this has helped boost confidence somewhat.
Euro, UK & US Currency - Halo Financial

Chinese performance supports global economy
Chinese economic growth remains strong, particularly in the manufacturing sector - a good sign of the health and future prospects for the global economy.
Japanese Yen slips and bounces
Elsewhere in Asia Pacific, the Japanese Yen regained some strength against the Pound after a torrid time last week, thanks to positive spending data for Japan and some potential answers to Brexit uncertainty. The US Dollar appears to be the "safe haven" currency of choice however, despite Trump, trade and ongoing global nail biting about the future of international relationships. Life is a rollercoaster...
Going down...
Dollar is down, Down Under
Meanwhile, the Australian Dollar is suffering again after the Australian central bank, the Reserve Bank of Australia (RBA) left their base rate unchanged at 1.5% for its 25th meeting in a row. While the discussion from the central bank was less cautious than previously, not increasing rates is a sign of uncertainty and provides little fuel for the Australian currency. Combined with recent political strife, it has kept the Aussie Dollar under pressure. This is likely to be the case for some time yet unless there is any dramatic or surprise change to Australian economic performance. The Australian trade surplus fell, according to figures released on Thursday 6th September, although this drop was not as low as was anticipated, so it will do the Australian Dollar no harm.
Now That's What I Call Brexit: Disco Currency Classics 
  1. See saw - Aretha Franklin (May she rest in peace)
  2. Rock The Boat - The Hues Corporation
  3. Don't Leave Me This Way - Harold Melvin & the Blue Notes
  4. Gotta Get Out of Here - Lucy Hawkins
  5. Getaway - Salsoul Orchestra
  6. Never can say goodbye – Gloria Gaynor
  7. Ain't That Enough For You - John Davis and the Monster Orchestra
  8. Don’t you (forget about me) – Simple Minds
  9. Miss you much – Janet Jackson
  10. Why leave us alone - Five Special
  11. Neither one of us want’s to be the first to say goodbye – Gladys Knight and the Pips
  12. Please don’t go – KC and the sunshine band
  13. Got to give it up – Marvyn Gaye
  14. I will survive – Gloria Gaynor
  15. Time is tight – Booker T and the MGs
For your daily, weekly or monthly dose of currency wisdom, catch up on the latest developments with Halo’s Currency Insights.